The Union Cabinet may approve the Rs 10,000 crore SME Growth Fund at its meeting on Tuesday, according to a report by Moneycontrol.
The fund, announced by Union Finance Minister Nirmala Sitharaman in the FY27 Budget, is aimed at supporting eligible small businesses and enterprises based on specified criteria.
It is expected to provide equity support to select firms that have demonstrated growth potential and require additional capital to expand their operations.
As per the report, the initiative could help Micro, Small and Medium Enterprises (MSMEs) facing difficulties in accessing funds amid credit constraints. It is also intended to support businesses affected by financial stress and outdated technology.
SME Growth Fund to provide equity support
While presenting the Budget in Parliament, Sitharaman announced the Rs 10,000 crore fund to support the expansion of promising enterprises across the country.
The Finance Ministry had said the fund would provide equity support to select enterprises based on predefined eligibility criteria.
The government also announced additional support for the Self-Reliant India Fund. The Budget included a Rs 2,000 crore top-up, while the broader fund-of-funds structure is expected to receive further allocations during the year to continue equity participation in MSMEs.
Budget focuses on improving MSME liquidity
Apart from equity funding, the Budget outlined measures to address liquidity challenges faced by smaller businesses through the Trade Receivables Discounting System (TReDS).
The government plans to make TReDS mandatory for all central public sector enterprises when conducting transactions with MSMEs.
Other proposals include integrating the Government e-Marketplace with TReDS and expanding credit guarantee coverage for invoice discounting.
The government also plans to allow receivables generated through TReDS to be issued as asset-backed securities.
Together, the measures are aimed at improving access to equity and working capital for MSMEs, strengthening payment mechanisms and easing financing constraints for businesses seeking to expand.
